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A day of rest for the central banks, it seems.
Yesterday, the Federal Open Market Committee decided offer no additional monetary easing. The Wall Street Journal, home of Jon Hilsenrath, who is often spot-on when it comes to Feb predictions, thinks that they may make a move next month (£), but for now, the committee seems to be taking the view that stable (albeit low-ish) growth and low inflation beats taking the risk of an inflation spike to tackle the high – and calcifying – levels of unempolyment.
The Bank of England also decided to take no action, keeping rates at half a percent and maintaining QE at £325bn. Unlike the FOMC, the monetary policy committee doesn't release its minutes until after the rate decision, so we can't know the reasoning behind its (lack of) action, but in all likelihood the constantly dropping inflation is luring it into a sense of security. Admittedly, that security isn't backed up by any other aspect of the economy, but despite Cameron's claim to be a "fiscal conservative but a monetary activist", neither he nor Osborne have made any move to changing the Bank's aim from stabilising inflation to a broader targeting of nominal GDP.
And the European Central Bank also declined to do anything to its rates, after slashing the deposit rate to a record low last month. But it did announce some unconventional monetary policy, as expected - and much bigger than anyone predicted. The FT reports:
The ECB can make outright purchases in open market operations "of a size adequate to reach its objectives," Mr Draghi has said. That almost certainly means a re-vamped bond buying programme.
So not every central banker is asleep at the wheel. Can it save the euro? Probably not. But it may delay some of the pain.
